China’s Rise in International ICT Standardisation:

Techno-nationalism and Techno-globalism

Heejin Lee, ProfessorGraduate School of International Studies

Yonsei University

서울대2015년 4월 24일

1. Introduction◦ Why standards/standardisation

2. Techno-nationalism and techno-globalism3. China’s ICT standardisation◦ Three cases: WAPI, TD-SCDMA & TD-LTE

4. Discussion5. Conclusion

} “Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, …” (WTO, Agreement on TBT, Annex 1)

} De facto, De Jure, …

1. Introduction

} Lower transaction costs} Grow the market size } Bring sustained value (i.e. stability) to users

and vendors} Bring social integration

} Standards also may hinder promoting progress by imposing accepted (i.e., old) standards (e.g. QWERTY)

} Less diversity for consumers

1. Introduction

} a set of technical specifications that allow communication between IT entities

} Competition ◦ = competition for establishing its own technology

as a standard ◦ thereby the standard owner can dominate a market

where the standard is widely and inevitably used} Standards wars!

1. Introduction

Camera: MPEG4

Communication:LTE, CDMA

Broadcasting: DMB, ATSC

Video: MPEG,H264

Others: NFC, etc.

1. Introduction

} Network effects; network externalities} Positive feedback} Path dependency} Lock-in} Switching costs} Possible inefficiency

} Many successes of digital businesses (and media) can be explained from the perspective of standards and platform competition.

1. Introduction

1. Introduction

- A patent that must be used to comply with a (technical) standard- A patent is called essential if it isnecessarily infringed by any implementation of the standard

} Limited participation of foreign actors in domestic R&D, with a focus laid on national gains through accessing foreign technology and the monopolization of technology rather than on mutual exchange with other nations (Edgerton, 2007)

} “autonomy over dependence on foreign technology, the diffusion of knowledge among national users, and the nurturance of domestic scientific and technological capabilities” (Keller and Samuels, 2003)

} “a domestic economy can be mature, and the nation secure, only if it exerts substantial control over the generation of knowledge and the standards by which design and manufacture are undertaken” (Keller & Samuels, 2003)

2. TN and TG

} Global barriers to the transfer and diffusion of technology and innovation should be reduced

} While states provide infrastructure for R&D, they do so only at the level of basic science research.

} Applied or commercial technology development is the responsibility of individual firms (Keller & Samuels, 2003).

2. TN and TG

} Aims to establish an innovation society and build the world’s best R&D capability by 2020

◦ China's 2013 R&D spending estimate is $220 billion, while US’ $424 billion; yet China set to surpass U.S. in R&D spending in 10 years according to the 2013 Global R&D Funding Forecast by Battelle (Computerworld, 2012)◦ According to the 2011 Royal Society report, China was second

only to the US in terms of its share of the world's scientific research papers written in English, and it could soon overtake the US (The Guardian, 2011)◦ In 2011, China received over 526k patent applications compared

to over 503k for the US (WIPO, 2012)

} The government believes that the development of technical standards plays a key role in the establishment of a system for innovation economy.

3. China’s ICT Standardisation

} Patent trap: the more it sells products, the more it pays royalties to firms which own patents; ◦ Risks of becoming a subordinate player in the global

production network

} In 2006, the Chinese gov’t unveiled its 15-year plan to promote indigenous innovation and lessen dependence on foreign technology◦ Targets include the development of unique technical

standards that would reduce dependence on foreign technology by 30% by 2020

3. China’s ICT Standardisation

} Wireless LAN Authentication and Privacy Infrastructure◦ Security protocol for

wireless◦ Mandated use announced

with a short notice◦ The protocol only given

to Chinese firms◦ Led to a trade dispute

with USA◦ Withdrew the plan

} Some quotes◦ “Market is the Pillar of

Standards.”◦ “Why can’t we use our

huge market to make Chinese standards as international standards?”

3. China’s ICT Standardisation

} 2G Mobile Standard was bifurcated by Europe GSM and US CDMA

} Datang developed 3G TD-SCDMA in collaboration with Siemens◦ 2000; approved as a 3G international standard by ITU◦ 2001: by 3GPP ◦ 2006: a Chinese national standard

} The gov’t support played a significant role ◦ in the process of TD-SCDMA becoming an international

standard◦ the industrialization of TD-SCDMA– e.g. in October 2002, the MII allocated 155MHz of 3G radio

frequency spectrum to TD-SCDMA compared to 60MHz for CDMA 2000 and W-CDMA

3. China’s ICT Standardisation

} In January 2012, 4G TD-LTE, a next generation technology to TD-SCDMA, approved as an international standard by ITU

} Currently, the Chinese gov’t actively supports the promotion of TD-LTE, which was built upon Chinese technology◦ e.g. to allocate 190MHz of frequency spectrum in the

2.6GHz band for TD-LTE deployment

3. China’s ICT Standardisation

• Alternative to Western technology• No or less royalty payment• Bargaining Chip/leverage

• Full package• e.g. aid to developing countries• “China’s 60th Anniversary, its Rise in Soft Power

and ICT Standardisation” (http://www.talkstandards.com/china%E2%80%99s-60th-anniversary-its-rise-in-soft-power-and-ict-standardisation/)

• National agenda for innovation economy• Technical standards as a pillar• “third-class enterprises sell products, second-class

technology, and first-class standards”

4. Discussion

WAPI TD-SCDMA TD-LTE

National standard Not to become ‘the’ national standard

‘a’ national standard ‘a’, but in fact ‘the’

Type of standard De jure De facto (one of the three)

De facto

R&D Chinese Siemens + Chinese More Chinese

Alliance with foreign firms

none Alliance with Siemensfrom the beginning

More

Government role controller Still in controller, but facilitator

Less controller, more facilitator

Closed Open OpenTN TG TG

4. Discussion

} For standardisation, technical superiority is just a necessary condition◦ Political support◦ Ability to coordinate diverse interests of the stakeholders à

alliance} In building, developing, and maintaining alliances,

relatively more weight is placed on links with foreign firms over time than with local firms

} China is increasingly open to foreign firms to gain their support and cooperation, which is required for international standardization and commercialization of locally-developed standards.

} TN à TG?

4. Discussion

Technology Chinese Standards International Standards

Digital Video PlayersVCD 3.0, CVD, EVD, HDV,HVD, CBHD

SVCD, DVD, Blu-Ray,HD-DVD

Mobile Telephony TD-SCDMA, TD-LTE WCDMA, CDMA2000, LTEWireless LAN Encryption WAPI IEEE 802.11iAudio-VideoEncoding/Decoding

AVSMPEG2, MPEG4-3(AAC),MPEG 4-10(H.264), VC-1

Digital Trunking GoTa, GT800 TETRA, iDENDocument Formatting UOF ODF, OOXMLHome Networking IGRS, ITopHome DLNA, UPnP, KNX, ECHONETMobile Phone Charger YD/T 1591-2006 None

Mobile TVCMMB, T-MMB, CDMB,DMB-T, CMB

DVB-H, T-DMB, MediaFLO

Radio Frequency Identification(RFID)

NPCISO 18000 and others, EPC/GS1, Uid

Security Computer Chip TCM TPMWireless Metro Area Network McWill WiMax

China’s technical standards (1993-2010) 4. Discussion

} EU◦ To coordinate EU policies with China’s indigenous

innovation and standardisation policies} US◦ See as a threat to its standardisation regime

} Korea◦ Another newcomer to the international standards

regime; e.g. WiBro◦ Competition or collaboration?

5. Conclusion

} “The Rise of China in Technology Standards: New Norms in Old Institutions”◦ Research Paper Prepared on Behalf of the U.S.-China

Economic and Security Review Commission in Jan 2013◦ Chinese unique standards not achieved some of their

goals like; – To develop indigenous innovation capabilities– To secure a new revenue stream ◦ New norms– Chinese standards efforts establishing new norms of low

prices for embedded IPRs in standards– e.g. by developing Chinese standard AVS, China was able to

set a royalty rate for AVC at $0.15 per unit (cf. MPEG-2, AVC’s predecessor at $2.5 per unit)

5. Conclusion

} China may become a new front in the global patent war (Washington Post, 2012)

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5. Conclusion